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IRS Breach More Extensive Than First Reported

The IRS now believes that the attack against its system affected more than 300,000 taxpayers. Security experts weigh in on the new information.

The U.S. Internal Revenue Service is mailing letters to 220,000 Americans this week to inform them that their information was involved in a data breach. That figure is an expansion of the breach the IRS first reported May 26.

The original disclosure estimated that 100,000 American taxpayers were affected due to an attack against the Get Transcript service. The Get Transcript service enables taxpayers to obtain a statement of their tax account transactions, including line-by-line tax return information, as well as income reported to the IRS for a given tax year.

After the May disclosure, the IRS conducted an additional review and found that more Americans were at risk then first reported. "The new review identified an estimated additional 220,000 attempts where individuals with taxpayer-specific sensitive data cleared the Get Transcript verification process," the IRS stated. "The review also identified an additional 170,000 suspected attempts that failed to clear the authentication processes."

The Get Transcript system has been offline since May as the IRS continues to try to figure out what happened and harden the system against future attacks. The IRS is providing free credit monitoring to those affected by the breach.

Further reading

"The IRS believes some of this information may have been gathered for potentially filing fraudulent tax returns during the upcoming 2016 filing season so anyone receiving a letter should take steps to protect themselves by taking advantage of the free credit monitoring and IP PIN, which can be used to verify the authenticity of next year's tax return," the IRS stated.

"Unfortunately, it is not uncommon that further investigation of an incident reveals a greater breadth and depth of an attack," Paul Kurtz, CEO of TruSTAR Technologies, told eWEEK.

It's important for enterprises—including government agencies—to begin sharing incident data with each other via secure means, Kurtz said. Incident data can be correlated, revealing additional indicators of compromise, which will help the victim ensure they understand the full scope of an attack more quickly and alert others to a possible attack, he added.

Scott Petry, co-founder and CEO of Authentic8, also is not surprised by the additional disclosure from the IRS. "In the haste to appear to be on top of the situation, organizations who are dealing with a breach will want to appear in control," Petry said. "This can lead to low estimates on the impact—mid-attribution of the exploit—compromised systems and more."

Dmitry Dain, co-founder of Virgil Security, said it's neither surprising nor isolated that a data breach's impact is greater than expected, and as the IRS gets a better grip on the breach, there may yet be further upgraded estimates. "Traditionally, entities—from Target to IRS to OPM—are slow to determine the extent of the affected data," Dain said.The U.S. Office of Personnel Management (OPM) initially reported in June that 4.2 million Americans were affected by a breach of its systems. In July, OPM upped the figure and admitted that 25.7 million Americans were at risk.

Andy Hayter, software security evangelist at G Data, doesn't see the new IRS disclosure as a replay of the OPM incident. Currently, the IRS breach involves hundreds of thousands of victims, compared with tens of millions affected in the OPM breach.

"There is a difference in that the IRS breach was most likely done to steal identities, whereas the OPM breach was an intelligence-gathering breach with far greater consequences," Hayter said.

Darren Guccione, founder and CEO of Keeper Security, said that while the IRS breach is not on the same scale as OPM, it is comparable when you look at the type of data that was exposed.

"The information found in tax filing databases is just as valuable to cyber-criminals as the OPM data," Guccione told eWEEK. "Think about what's in your tax forms—[Social Security numbers], taxpayer ID numbers, complete work history, income sources, home address, phone numbers, the list goes on. It's more than sufficient to disclose your entire identity and provide identity thieves and phishers exactly what they need to conduct further scams."

There is another key difference between the IRS and OPM incidents, according to Authentic8's Petry, and that is the fact that OPM was on record for numerous years for lax security practices and insufficient technology safeguards. OPM had outsourced system management of key resources to foreign national subcontractors, but it isn't clear that the IRS was doing the same thing, he added.

"However, it does suggest that the federal government is not prepared to safeguard our data," Petry said.

Sean Michael Kerner is a senior editor at eWEEK and InternetNews.com. Follow him on Twitter@TechJournalist.